July 10 (Bloomberg) -- Robert Diamond, who quit as head of
Barclays Plc last week after allegations that interest rates had
been rigged, denied he misled Parliament on relations with
regulators and said he’d be willing to discuss the matter again.

Diamond, the former chief executive officer of Barclays,
was accused today during a hearing of Parliament’s Treasury
Committee of misleading U.K. lawmakers after a letter from the
Financial Services Authority emerged. The letter contradicted
his July 4 testimony that regulators were “happy” with the
bank, and Chairman Marcus Agius told the panel today the bank’s
interactions with the FSA were “strained.”

Any suggestion that Diamond was less than candid “would be
totally unfair and unfounded,” the ex-CEO said in a letter to
Treasury Committee Chairman Andrew Tyrie. “The comments made at
today’s hearing have had a terribly unfair impact upon my
reputation.” Diamond wasn’t present during the session.

Diamond resigned July 3 after the London-based lender was
fined a record 290 million pounds ($450 million) for attempting
to rig interest rates used as a benchmark for global lending. A
day later, Diamond told Tyrie’s committee that the FSA had been
“specifically pleased” with the “tone at the top,” and he
didn’t disclose the FSA’s criticisms of transactions that aimed
to show the bank’s accounts in a more positive light.

Agius released an April 10 letter from FSA Chairman Adair
Turner in which the regulator cited “a pattern of behavior”
that cast doubt on whether Barclays could be trusted.

Trust Issues

“Barclays has a tendency continually to seek advantage
from complex structures or favorable regulatory
interpretations,” Turner said in the letter, which Agius said
he had showed to Diamond. “The net impact has clearly been
unfavorable to the degree of external trust in Barclays’s
approach to issues such as tax, regulation and accounting.”

Diamond, 60, said the FSA felt there were some “cultural
issues” that needed to be resolved at Barclays, and didn’t
mention the letter even when prompted by Tyrie.

“Diamond lied to the committee,” David Ruffley, a
committee member from the U.K.’s ruling Conservative Party, said
at today’s hearing. John Mann, a fellow committee member and
lawmaker from the opposition Labour Party, said Diamond should
be recalled to give more evidence.

“The information provided by Marcus Agius exposes the
inconsistencies of Bob Diamond’s responses,” Mann said. “Our
only option is to recall Diamond to get the full truth.”

Libor Probe

Barclays, along with some of the world’s biggest financial
institutions, faces an international investigation into an
attempt by lenders in the U.K. and U.S. to rig the London
interbank offered rate. Known as Libor, it’s determined by 18
banks’ daily estimates of how much it would cost to borrow from
one another for different spans and currencies, and it’s used to
help set rates on more than $360 trillion of securities,
including mortgages, student loans and swaps.

British lawmakers’ power to punish people they conclude
have misled them unclear. Parliament’s Standards and Privileges
Committee is still considering what action to take against three
former News Corp. executives whom the Culture Committee
concluded had misled it over phone-hacking. Historical powers to
jail people guilty of contempt of Parliament haven’t been used
in more than a century.

No Bonus

Diamond will forgo 20 million pounds of deferred bonuses,
and receive 2 million pounds in base pay and pensions, Agius
said today. Barclays had been under pressure to limit Diamond’s
severance after the record fine. Diamond, Britain’s best-paid
bank CEO, has earned about 120 million pounds in pay and bonuses
since 2005, according to Manifest Information Services Ltd.

Diamond said he was “dismayed” the committee suggested he
wasn’t honest with lawmakers in the letter. He said he wasn’t
asked about the April letter under questioning, and it referred
to a meeting he didn’t attend.

Barclays rose 2.2 percent to 167 pence in London trading
for a market value of about 20.4 billion pounds. The stock has
dropped 5.1 percent this year, making it the worst performer in
the six-member FTSE 350 Banks Index.

Turner’s letter criticized the bank for a series of
“complex structures” aimed at showing the firm’s capital
position in a positive light. The Protium transaction in 2009,
which involved moving the riskiest assets off its balance using
a Cayman Islands-based fund run by former executives, was a
“convoluted attempt to portray a favorable accounting result,”
Turner said.

‘Potentially Misleading’

Barclays also gave a “confusing and potentially misleading
impression” that it had a core Tier 1 capital ratio of more
than 10 percent under stress tests conducted by the European
Banking Authority last year, Turner said. The lender actually
held a 9.8 percent ratio, he said.

Agius said Bank of England Governor Mervyn King told him
that Diamond had lost the support of regulators, prompting his
departure. Barclays was the first of at least 12 banks to settle
with the U.K.’s FSA, the U.S.’s Commodity Futures Trading
Commission and the Department of Justice.

Diamond’s resignation was announced on July 3, the morning
after a 6 p.m. meeting with King, Agius and Michael Rake, the
then-head of the company’s audit committee, Agius said.

King “was saying he had no power to direct us, but he felt
it was sufficiently important for us to be told in absolute
terms what the situation was,” Agius said. “It was made very
clear that Bob Diamond no longer enjoyed the support of his
regulators.”

‘The Governor’

Following the conversation, Agius held a board meeting with
the non-executive directors and then spoke with Diamond.

“The Governor made it perfectly clear that any decision
that would be taken would be taken by the board or Bob Diamond
individually,” Agius said.

Agius, who became chairman in 2007, relayed the King
conversation to Diamond, who “was not in a good place,” he
said. Diamond asked for some time to speak to his family before
making a decision, Agius said.

“You were handing him a loaded revolver weren’t you?”
Tyrie asked.

“We left confident that if he hadn’t already made the
decision, he would make the right decision,” Agius said.